Uber, the Rashomon, Revisited

Uber has dominated the Valley’s conversation for years. A revisitation (and update) of my first post on the company.

Two and a half years ago I wrote a thought piece of sorts about Uber, which at the time was dominating the conversation in the Valley and beyond (it continued to do so, for increasingly negative reasons). I titled it “Uber, the Rashomon,” and ran it on my personal blog, Searchblog.

In the piece, I argue that like Microsoft, Google, and Facebook before it, Uber had become a cultural touchstone of sorts — a shared narrative debated by nearly everyone in the industry. But this time the conversation had moved well beyond “tech” — Uber stood in for larger debates around the future of work, the role of “public goods” in our society, and the existential questions of what we expect from the companies we extol as “world beaters.”

I think the piece has aged well, because as of this writing, Uber remains a fascinating litmus test for what society expects of its corporations. Given all that’s happened at Uber since my original post, I thought it might be worth revisiting. I’ve cut and pasted it below, and added some italicized commentary as well. (Oh, and just for fun, I’m trying out posting this for Medium membership as well).

(First published April 26, 2015)

Our industry loves a rashomon, and in the past year or two, our collective subject of debate has been Uber. Perhaps the fastest growing company in history (its numbers aren’t public, but we’ll get to some estimates shortly), Uber has become a vector for some of the most wide-ranging arguments I’ve ever had regarding the tech industry’s impact on society at large.

It’s not that Google, Facebook, Apple, or Microsoft didn’t evoke great debate, but all those companies came of age in an era where tech was still relegated to a sideshow in the broader cultural conversation. Microsoft was taking over the computer industry in the 1990s, Google the Internet in the early 2000s, Facebook and Apple the mobile and social world in the late 2000s. But Uber? Uber is about a very real and entirely new approach to our economy, a stand in for the wealth divide festering in the US and beyond, an existential rorschach testing your values around the role of government, the social contract, and the kind of society we want to become.

When an Uber glides to its appointed pickup point, what do we see? Do we see an innovator hastening the inexorable shift to a new information-based economy? Or an arrogant bully using cheap capital, greed, and a dangerous, misogynist culture of convenience to consolidate a trillion dollar market?

Or do we see both?

Yes — that’s a cop out, but it’s also an honest answer. I know people who work at Uber, and I know some of Uber’s investors as well. They are in general a well intentioned group — and many of them have reservations about Uber’s unbridled success and its mixed reputation {two years later, that reputation came to the fore, with a vengence}.

Uber’s success is breathtaking. Consider: Uber’s most recent round valued the company at over $41 billion — $15 billion more than Google’s initial public market cap of $26.4 billion {the company has been valued since at more than $70 billion. However, the recent Softbank deal may set that valuation lower once secondary transactions are complete}. At a conference I attended last month, an Uber executive mentioned the company was clocking more than one million rides each and every day. If you (conservatively) estimate each ride at $10, that’d be gross revenue of $10mm a day, or $3.65 billion a year {Uber gross revenue is now pushing $10 billion} . Uber takes roughly a quarter of that revenue (20% is the widely reported number, but when I ask drivers, they tell me it’s 25–28%), or just under a billion dollars. And their costs are….well, assume about 2,000 employees (I’ve heard estimates of 1200 to 2500), for $250mm or so in labor costs. I’m pretty sure they’re not spending another $750mm on marketing and platform costs. So the company is most likely quite profitable already.

And my figures are conservative. Business Insiderclaims the company is on track to do $10 billion in gross revenue this year, and CEO Travis Kalanick last year claimed revenue is doubling every six months. In five years, Uber has expanded to 57 countries. So, yes, this company is astonishingly successful.

And yet…I’ve not met a single person in this industry who doesn’t express reservations about Uber. Certainly the company stepped in it terribly with the whole Lacy debacle, but the ambivalence goes deeper still. I’m sure pure Uber defenders exist, but the truth is, most of us are worried about the sheer expression of capitalistic force that the company represents. Privately, many are heartened by the regulatory counterforces that are stemming the company’s march through worldwide markets — Germany, Holland, India, Korea, Canada, Spain, France, New Zealand, and many other countries have banned Uber’s services either nationally, or through local city regulations.

Uber is the poster child for our global conversation about the role of work in our society, and about the kind of company we want to create, work at, and celebrate. And that conversation is deeply political and cultural in nature. On the one hand, the “1099 Economy” is providing hundreds of thousands of flexible, living wage jobs for those who might otherwise be marginalized or underpaid. On the other, it represents the systemic dismantling of our labor laws by rapacious, profit seeking monopolists.

If you want to hear an unalloyed economic takedown of Uber, head over to Robert Reich’s blog. And if you want to hear a reasoned defense of the company as an innovator, read what Suster has to say. But anyone who read Sarah Lacy’s passionate story has to wonder — if we didn’t have Uber now, wouldn’t the Valley just end up creating it? Certainly that’s Lacy’s conclusion — Uber is the collective creation of the Valley’s deep arrogance, its heartless celebration of high valuations and killer exits, and its male-dominated, aggressive philosophy of “breaking things fast” and “asking for forgiveness rather than permission.” {It is this very culture that new CEO Dara Khosrowshahi is now trying to remediate.}

Put another way, Uber feels inevitable — a uniquely of-the-moment company, a mirror held up to the Valley’s aggregate psyche. And as we all look into that mirror, we are both fascinated and appalled.

All of this was at front of mind a month ago when an email from a site called FounderDating popped into my inbox. FounderDating is a LinkedIn-like service that connects entrepreneurs, and it sports a lively Quora-like Q&A forum. When interesting new threads emerge, the service notifies you. “Is Uber A Social Impact company?” was the question of the day, and it immediately sparked a strong debate, as you might expect. Lydia Eager, the thread’s originator, opened with this:

A lot of people love to hate uber because of their aggressive tactics, but the fact of the matter is that they are creating 20K new driver jobs/month and the median uberX driver income in NYC is $90K/year. Feels to me like they do way more good than harm and I’d consider them a social impact company. They are having a much bigger impact than say a non-profit trying to create jobs. Do you have to have set out to have a major social mission to be considered a social impact company?

From there a diverse group of folks, myself included, chimed in with 50 or so thoughtful replies, touching on the importance of purpose- and mission-driven business, the role Uber plays in destroying living-wage jobs in the taxi and livery businesses, the actual economics of driving for Uber and similar businesses, the positive impact Uber has on carbon emissions, congestion, and drunk driving, the inevitable future where driverless cars and automation make workers irrelevant, the positive competitive response Uber has created in the taxi business (better customer service, competing apps, etc), stories of questionable competitive business practices, stories of rape and kidnapping (on both sides — taxies and Uber), debate over the meaning of “social impact” at its core, debate over the role of local and national regulation, debate over consolidation of power and money in markets and society, debate over libertarian political philosophy, and much, much more.

I hear these questions debated every time Uber comes up at a party, an industry event, or just between friends shooting the breeze. Back in 2013, when we were starting NewCo, we had the same debate when we were considering which companies to invite to our first full-fledged NewCo festival in San Francisco. We asked ourselves whether Uber was really a NewCo — an engine of positive change in our society. We couldn’t make up our mind and ended up kicking the can down the road. This year, we have to once again tackle the question. And I’m still not sure where we’ll land. {We let them present. It was a very hard call at the time}.

Like it or not, Uber is now our rashomon for understanding the impact technology is having on our culture. The company is showing signs of “growing up” — as all fast-growing tech companies do over time (you have to love Facebook shifting its motto from “Move fast and break things” to “Move fast …with stable infrastructure”). Uber’s stance to local regulators has shifted from a siege mentality to one of engagement (necessarily, I’m sure). Its CEO (and the offending exec) apologized, sort of, to Lacy, and has shifted its public voice to highlight its positive impact on the world — the first image on its site today is of a woman, with the headline “Her Turn to Earn — Creating 1,000,000 jobs for women by 2020.”

Is this all just calculated PR spin, or might it represent a real shift in the company’s culture? I think I know where Lacy stands on this one — she was personally targeted by a senior Uber executive, and she’s in no mood to give the company a second chance. But for most of the rest of us, the ambivalence — and the broader debate — continues. I personally believe that companies can change over time — Walmart, Unilever, and many others are now champions of sustainability — yet one could reasonably argue they played huge roles in creating the unsustainable world in which we currently live. But does that mean we shouldn’t celebrate and encourage their corporate change of heart?

If we dismiss these glimmerings of change as mere greenwashing, we are handing corporations an excuse to continue past practices. Instead, we should hold them accountable. For Uber — and all of us — that journey has just begun.